The Central Queensland (CQ) cropping region grows significant tonnages of oilseed crops such as sunflowers and cottonseed but has no access to a processing facility in Queensland. Freight and handling costs are a significant barrier to the expansion of oilseed production in CQ.
A pre-feasibilty study was instigated by the Queensland Department of Agriculture, Fisheries and Forestry under the recomendation of an industry working group to examine the profitability of a local crushing facility being based in the region and the impact that this would have on the gross margins of local growers.
A number of production scenarios were analysed in relation to historical crop production capacity of cottonseed and sunflower seed.
The analysis proved that the economies of scale were integral to the success and sustainability of a regional cushing plant. A crushing plant with capacity of 64,000 tons was far more sustainable than a crushing plant of 34,000 tons and had a much better return on investment. A regionally based crushing plant would rely on cottonseed as the mainstay of the business with sunflowers providing the potential to expand production levels further.
A local crushing plant could afford to pay a small premium over historical market levels but the price paid for raw seed was still heavily influenced by international markets despite the effeciencies generated by freighting higher value oil products from CQ.